Standardised state financing program for the development of public-school infrastructure through PPP

Context

Within the state “Education Development” (2018-2025) program, the Ministry of Education of Russia and the State Development Corporation VEB.RF launched a program of state support for construction and operation of public schools through PPP mechanisms. VEB.RF assesses and selects projects based on proposals from municipal governments.

Problem

• Not all public-school infrastructure fully met the requirements for quality educational process in Russia.
• Commercial banks are cautious to provide sufficient financing on affordable terms without a public lever.

Innovation

• Projects are supported based on competitive selection with the single approved concessionaire ProShkola.
• Selected projects follow explicitly specified standard contract provisions.
• State financial support includes the provision of capital subsidies and co-funding of availability payments.
• The volume of support is determined based on regional budget characteristics (tax incomes vs. public expenditures ratio).
• Supported projects undergo contract performance monitoring.

Stakeholders involved

• Ministry of Education: Curator of financing program
• VEB.RF: Co-financing organisation (up to 30% of private investments needed for project)
• ProShkola:1 A concessionaire approved by the government to conclude concession agreements without a tender

Timeline

Results and impact

• The participation of VEB.RF in the program has also secured the participation of Sberbank, one of the largest commercial banks in Russia. VEB.RF and Sberbank will jointly finance projects under this program.
• The program will create more than 647,000 new, modern school places in the country (1,300 new schools will be built).
• The project is aimed at creating physical infrastructure, including swimming pools, gyms with expanded functionality, spaces for libraries, recreation areas for students and teachers, and spaces for collective creative and scientific studies.
• The implementation of the program is one of the important elements in achieving the key goal of the national project ‘Education Development’, which is to bring Russia to the top 10 countries in terms of the quality of education by 2024.
• The focus is on creating facilities that directly affect the quality of people's daily life.

Key lessons learnt

• PPPs in education allow for quicker solving of the problems of commissioning new schools, ensuring the transfer of relevant educational practices from region to region and distributing the up-front cost of new infrastructure on regional budgets over a longer duration.
• Standard contract provisions and contract performance monitoring allow building a wide pipeline of project proposals that can be structured quickly while not lacking in quality.
• Partnering with a national infrastructure bank and a single approved concessionaire that has sufficient financial and human capacity, acting as program financiers and operators, allows for successful replication of quality project cases.